An Israeli Army unit last night occupied a demilitarized area in southern Jerusalem which lies Just to the west of Government House which is now serving as headquarters for several U.N. commissions and the U.N. commission and truce machinery. The occupation was carried out with almost no incident. The only area dividing the Jews and the Arabs now is the strip of land on which Government House itself stands.

The only untoward incident was the opening of fire by Arab Legionnaires when the Jews occupied the first Arab house in the area. However, the Israelis, under orders not to fire unless directly attacked, did not reply. The Arab Bren gun soon ceased chattering and the Legionnaires withdrew from their positions in this area today they returned, but have contented themselves with merely watching the Jews.

The first Israelis to enter the area were workers who cleared it of stone barricades, barbed wire and mines. As soon as the area surrounding a former Jewish agricultural school had been cleared, the Israelis began ploughing the fields which have been left untended since last summer. Also in the area is an Arab college which is now occupied by 20 U.N. observers. The Jews have made no attempt to enter the college, and have not molested the U.N. observers in any manner.

The observers, however, protested to the Jews against their ploughing the fields. The Jews pointed out that the only prohibition in effect in the area was against their using it for military purposes. When the troops later laid down a field telephone system, the U.N. observers out the line. The unit commander protested and the observers apologized. Today, the U.N. has formally protested the Israeli occupation.

Lt. Col. Moshe Dayan, Israeli commander in Jerusalem, at a press conference denied a rumor that the occupation came about as a result of an agreement between Israel and Transjordan. He also revealed that meetings of the two Israeli-Transjordan armistice commissions which were scheduled for today were cancelled by the Arabs without warning and without giving any reason.BLACKPOOL,England